The Problem of Underemployment

Not unemployed, but not fully employed, either? This has become a national trend, with Mississippi among the highest rates.

Not unemployed, but not fully employed, either? This has become a national trend, with Mississippi among the highest rates.

Wendell Cox, contributing editor for New Geography, recently addressed the problem of “Underemployment in America,” saying this rate may be even more indicative of poor national economic performance than the unemployment rate. Underemployment creates the problem of an “output gap”–a gap between what the nation could be producing compared to what it actually does produce.

Cox said the underemployment rate is far above the basic unemployment rate. In 2012, the Bureau of Labor Statistics (BLS) underemployment rate (U-6) was 14.7 percent, while the unemployment rate (U-3) was 8.1 percent. Cox said the U-6 could be even higher than listed if it included college graduates who hold jobs below their degree level.

The BLS underemployment numbers are even worse for Mississippi, coming in at 15.8 percent in one 2013 measurement. This puts Mississippi as 45th in the nation for underemployment, just shy of earning rank among the worst five underemployment states in the nation.

Underemployment comes at a bad time, said Cox. Governments are overspending, pensions are in crises, and college graduates need good jobs to pay off their loans. On top of that, Obamacare encourages employers to shift employees to part time status, because that lets employers off the hook for paying extra healthcare expenses. It simply worsens the picture for underemployment.

He concluded,

“All of this points to two important policy implications. The first is the necessity of focusing on the underemployment measure, the improvement of which is so crucial to maintaining and improving the standard of living and reducing poverty (by reducing the productivity gap). The second is that, with such a focus, policy makers from Washington to Sacramento, Lansing, and Carson City must pursue policies that encourage investment and employment.”

Aside from policy issues, could there be any social or educational factors that also play into the problem for Mississippi?